According to the latest statistics from the United States government, the U.S. economy rebounded from the short-term recession caused by the COVID-19 pandemic much stronger than expected by economists and previously announced by the U.S. government. The strong momentum is mainly driven by the significantly larger consumer spending growth in 2022 and 2023, which undoubtedly will continue to propel the giant ship of the U.S. economy forward, as 70%-80% of the components of the U.S. GDP are closely related to consumption. Looking ahead at the future of the U.S. economy, after the Federal Reserve cut interest rates by 50 basis points to kick off a rate-cutting cycle, many institutions, including Goldman Sachs, believe that the U.S. economy is getting closer to a 'soft landing'—successfully lowering inflation through an aggressive rate hike cycle while maintaining stable economic growth.

The comprehensive annual update from the Bureau of Economic Analysis in the U.S. shows that from the second quarter of 2020 to the end of 2023, the Gross Domestic Product (GDP) of the USA, adjusted for inflation, has an average growth rate of 5.5%. Compared to the previously announced growth of 5.1%, the revised numbers are significantly more optimistic.

For the actual GDP annualized quarterly rate for the second quarter of the USA, the optimistic growth rate of 3% announced earlier is maintained, with the rebound from the previous quarter mainly reflecting the accelerated growth in U.S. consumer spending, inventory investment, and business spending, indicating that the economic output in Q2 of USA still achieved strong growth. In the first quarter of this year, the U.S. government revised the GDP growth rate from the previously reported 1.4% to the latest final value of 1.6%. The strong economic growth data in Q1 and Q2, combined with the Federal Reserve initiating a rate-cutting cycle with a 50 basis point cut, significantly boosts investors' confidence in the U.S. economy successfully achieving a 'soft landing.'

Overall, the revised annual data shows that over the five years ending in 2023, the economic growth is $294.2 billion more than the figures reported by the U.S. government. Approximately two-thirds of the revision is due to a significant increase in consumer spending.

The Bureau of Economic Analysis in the USA has revised the annual economic growth rate for the entire last year from 2.5% to 2.9%, although most of the adjustments are concentrated in the first half of the year. Overall, the pace of expansion of the Gross Domestic Product (GDP) of the USA remains resilient, but the annualized quarterly rates for the third and fourth quarters have been revised downward.

In 2022, the real Gross Domestic Product (GDP) of the USA grew by 2.5%, which is 0.6 percentage points stronger than the previously announced data. Additionally, the latest data shows that in that year, there was only a decline in the first quarter's annualized quarterly rate of GDP, rather than the technical economic recession indicated by the initial GDP data reporting a decline for two consecutive quarters.

The final data revised by the government still shows an upward revision in the USA's total domestic income in 2023 (i.e. GDI, the income and costs generated from the production of goods and services). The inflation-adjusted growth rate of last year's GDI has significantly increased from 0.4% to 1.7%.

The overall trend of the USA's GDP has been in a strong recovery state since the latest revision post the COVID-19 pandemic.

In this section of the updated GDP data, two things are noteworthy: firstly, the upward revision of the GDP for the second quarter of 2022; and secondly, a slight slowdown in economic growth in the latter part of last year. Although still strong, the GDP growth rate for the third quarter of 2023 has been lowered by 0.5 percentage points to 4.4%, and the GDP growth rate for the fourth quarter has been revised down by 0.2 percentage points to 3.2%. This indicates a slightly weakened momentum for the USA's economy entering 2024, but the good news is that the final annualized quarterly rate of the real GDP for the second quarter of 2024 remains at 3% without any revision, and a slight upward revision for 2024 Q1.

GDP revision - the overall trend of GDP has been revised upward, but there is a slight decline in momentum at the end of 2023.

For 2022, the US government unexpectedly revised the USA's GDP for the second quarter from a decline of 0.6% to a significant increase of 0.3%. Previously, data indicated consecutive quarterly declines in GDP, in line with the traditional definition of economic technical recession, but in the USA, only the economists' team at the National Bureau of Economic Research (NBER) consider a US economic recession to be officially certified.

It is worth noting that this latest annual revision final value brings the GDI indicator closer to GDP (i.e. the total income obtained by all sectors in the economy, including wages, business profits, taxes, and rent income, excluding government subsidies). Updated data from the US Bureau of Economic Analysis shows that this government department raised the US national income by $240 billion in 2022 and nearly $559 billion in 2023.

In theory, GDP and GDI should be roughly equal, but in reality, these indicators occasionally provide drastically different economic conditions. The latest revision helps to narrow the gap between the two. In 2023, the growth rate of the USA's GDI was raised from 0.4% to 1.7%. The growth rate of GDI in 2022 was raised from 2.1% to 2.8%, and that of 2021 was revised up by 0.5 percentage points.

The revised results show that some usa residents have received stronger assistance income than previous measured indicators. These types of personal income, including interest income, dividends, and rental income, all increased in 2023. This strength may help explain why usa consumers have been able to spend more freely since the new crown epidemic than many economists imagined.

GDI statistics indicators have been revised upwards - the latest revisions have narrowed the significant gaps in measurement.

The annual updated data from the usa government also shows that within the five years leading up to 2023, overall profits of usa enterprises have increased significantly. In 2023, the overall profit of enterprises was revised upwards by as much as $288.5 billion.

In 2023, inflation was only slightly adjusted upwards, with the usa economy achieving one of its strongest expansions since the end of World War II after the epidemic.

The updated revised data from the Bureau of Economic Analysis in usa also shows that the preferred inflation measure by Federal Reserve officials - the Personal Consumption Expenditure Price Index (PCE) - in the year when usa inflation remained very high, was only slightly adjusted upwards. In 2023, the PCE statistical indicator rose by 3.8%, higher than the previous estimate of 3.7%. Excluding food and energy, the so-called core Personal Consumption Expenditure Price Index (or core PCE) was 4.1%, with no revisions, consistent with the previous value.

From the above data, it can be seen that after the epidemic caused the usa economy to plummet into a brief economic recession, even after the Federal Reserve's aggressive interest rate hike process following high inflation, raising the benchmark interest rate to 5.25% -5.5%, the usa economy rebounded quite strongly. This extraordinarily strong rebound reflects the epic stimulus effect of trillions of dollars in fiscal spending and the Fed's comprehensive QE in the period following the epidemic.

Overall, this unprecedented bottoming out rebound process of the usa economy that started in the second quarter of 2020 is one of the strongest economic expansion cycles in the usa economy since World War II.

The annual update from the US Bureau of Economic Analysis is based on the latest available and revised data, including the latest revisions from the first quarter of 2019 to the fourth quarter of 2023.

As the Fed's rate cut cycle begins, a 'soft landing' for the US economy seems to be imminent.

After experiencing one of the strongest economic expansion cycles since World War II, looking ahead to the future of the US economy, top Wall Street institutions such as Goldman Sachs believe that the US economy is very close to achieving the 'soft landing' that the Fed has been longing for.

In terms of economic data, the latest unexpectedly revised GDP growth rate, coupled with the basically as expected and cooling trend in the number of initial jobless claims in recent weeks - last week, the number of initial jobless claims dropped to a four-month low, and the crucial service sector for the US economy continues to show PMI growth expansion momentum, coupled with persistent downward inflation, perfectly aligns with the Fed officials' vision of a 'soft landing' for the US economy.

With US inflation rate significantly slowing down, and the Fed's unexpected 50 basis points rate cut initiating a rate cut cycle, this might provide significant demand pressure relief for industries such as housing and manufacturing severely impacted by high borrowing costs, and could potentially provide a heavy catalyst for growth by boosting spending from resilient US consumers since the pandemic, thereby driving accelerated economic growth in the US.

Goldman Sachs' Chief Financial Officer stated on Tuesday in US Eastern Time that the Fed's 50 basis points rate cut has put the US economy on a true 'soft landing' trajectory. Chief Financial Officer Denis Coleman said: 'I believe that the initial 50 basis points rate cut is a clear signal of a new direction. Hopefully, this will release more and more confidence and significantly reduce cost of capital - perhaps even take some more strategic measures by the end of this year.' 'Managing the economy in the transition has always been a very tricky job. But with inflation falling, unemployment at a manageable level, the Fed starting rate cuts, and to some extent maintaining the trajectory of a soft landing.'

Federal Reserve officials have recently stated one after another that with concerns about inflation fading, they are now more focused on the labor market aspect of their dual mandate. Fed Chair Powell has repeatedly stated that Fed officials are not seeking or welcoming further cooling of the labor market conditions. Powell and other Fed officials have hinted in various ways recently that the Fed's future main task is to avoid economic recession while ensuring a 'soft landing' for the US economy.